When it comes to "compliant DeFi," many people immediately mention KYC and AML, as if they've mastered the secrets. But once you actually engage with institutional-level requirements, you'll find that's far from enough.

Institutions need a set of compliance rules that can truly be implemented. Permission management, quota control, fund tracing, blacklist handling, dispute arbitration, audit trails—every one of these is necessary. The problem is, executing these processes on a transparent blockchain often leads to awkward results: transaction details are fully exposed, position relationships become public intelligence, and business secrets have nowhere to hide. Instead, it pushes participants further away.

The most interesting are those projects that try to put "compliance" and "privacy" within the same framework. Their logic is quite clear: daily transaction data can be kept confidential, but during regulatory review, necessary information can be disclosed selectively or through zero-knowledge proofs. This way, they can provide the evidence regulators need without turning everyone into an open book.

This is the right path for compliant DeFi. It's not about who shouts the loudest to win, but about designing rules that are both user-friendly and effective. The threshold for scaling lies right here.